Decision to step back from logbook loan reform ‘deeply disappointing’

Page Content

The government’s decision to not introduce its Goods Mortgages Bill
has been described as ‘deeply disappointing’ by the Money Advice Trust, the
charity that runs National Debtline.

The Bill, announced in the
June 2017 Queen’s Speech, was drafted by the Law Commission following a
comprehensive review commissioned by the Treasury in September 2014 and published two years later. It had been expected to be passed into law
via special Parliamentary procedures that exist for uncontroversial Law
Commission Bills of this kind.

Instead, the government
this week announced it “will not introduce
legislation at this point in time”, and will instead “continue to work with the
FCA as they carry out their high-cost credit review, and then further consider
government action on alternatives to high-cost credit” in light of its
findings.

Jane Tully, director of
external affairs at the Money Advice Trust, the charity that runs National Debtline, said:

“The
government has snatched defeat from the jaws of progress by deciding not to
introduce its Goods Mortgages Bill – a deeply disappointing decision,
particularly given how uncontroversial the proposed reforms were.

“The
government was right to ask the Law Commission to look into this issue back in 2014,
and since then a significant amount of work has gone into producing a Bill that
had widespread support – only for it to fall at this final hurdle.We hope the government will reconsider.

“In
the meantime, the urgency of addressing problems in the logbook loan market
remains.It is now even more important
that the FCA takes immediate action to improve consumer protections in this
industry – and gives a clear statement of its intent as soon as possible.”

Bills
of Sale are commonly used to secure a ‘logbook loan’ on goods you already own –
usually a car – and are a form of high-cost lending based on legislation that
dates back to the 19th century.
The advice sector has repeatedly raised concerns
about consumer detriment arising from this type of lending.​